Loan Programs

A private lender is a lender who makes loans secured by real estate and typically charges a higher rate than a bank in exchange for making loans that a bank would not make, funding more quickly and/or requiring less documentation.

Private lenders differ from banks in that they often fund more quickly, with fewer requirements. Private lenders are sometimes called “asset-based lenders” because they focus mostly on the collateral for the loan, whereas banks require both strong collateral and usually strong credit and solid cash flow from the borrower.

Private lenders exist because many borrowers often need a quick and reliable loan to secure a real estate transaction. Banks and other more traditional lenders that offer the lowest interest rates don’t provide the same combination of speed and transparency in their decision making and closing process as private lenders.

The funds come from investors who are seeking a secure return on their capital, including:

• A mortgage fund, funded many investors or 
• A group of investors who each invest in a fraction of a loan or
• An individual investor.

• Fewer requirements than more conventional lenders.
• A simpler and quicker application and closing process.
• Being able to borrow against vandalized and seriously damaged properties.
• Less scrutiny of the borrower’s personal financial situation, including income and historical tax returns.
• Borrowers can allocate less time to seeking financing and instead concentrate on other activities.
• Focus on the merits of the specific loan under consideration vs. the borrower's credit and documentable income.
• Borrowing by self-employed borrowers is easier.

This varies based on loan type and lender. For Red Tower Capital:

• SFR Owner-Occupied Bridge Loans - usually 11 months.
• Licensed Cannabis loans - 1-5 years. 
• Most other loans are for 6, 12 or 24‐months.

Yes, usually private loans can be extended with a modest fee.

• Single Family Homes
• Duplexes/Triplexes/Fourplexes
• Apartment buildings
• Condos
• Office
• Retail
• Industrial
• Licensed Cannabis
• Land/lots
• Special purpose properties, including places of worship, event spaces, etc. 

This varies a lot based on property type, loan scenario, LTV and loan amount.  Smaller loans with lower LTV on more traditional properties have less documentation requirements.  We look at the “exit strategy” of the loan scenario also.

This varies based on the loan scenario.  For simpler residential and already well-documented commercial loans, we can often close in 5 or 10 business days and can sometimes close even more quickly when necessary.  More complicated commercial loans requiring new environmental reports and with multiple tenants often take much longer.

An appraisal is a report from a licensed appraiser, containing their opinion of the value of the subject property based on standard measures of property value.

Red Tower Capital uses a rotation of licensed, qualified and independent appraisers to value the property.  We will also review existing recent appraisals. 

A Broker Price Opinion.  This is a cheaper, faster and more streamlined 3rd party valuation than an appraisal.  It is used more commonly for residential property loans vs. commercial ones.  Red Tower Capital accepts and/orders these in some cases.  

This depends on the loan scenario.  We can always review existing appraisals and BPOs and go from there.  For most programs we need a written 3rd party appraisal or BPO for the file.  For higher LTV and larger loans, in general we prefer to order these reports.

Also, we need recent environmental reports (e.g. Phase I's) for commercial property.

At Red Tower Capital, we determine loan amount by internal underwriting taking into account any 3rd party appraisal or BPO.

The draws are dispersed based on completed work.

There is an initial inspection to determine the scope of work, and subsequent inspections when draws are requested to determine if the appropriate work has been completed.

No, a borrower can still qualify with credit issues, as we can also look at income, assets, LTV and/or exit strategy to help qualify the borrower.

We don’t have a minimum credit score.

Yes.  Often.

Usually between $100,000 and $20,000,000.

Yes, RTC will lend to most types of entities, including LLCs.

No, escrow can arrange for a signing agent to bring the documents to the borrower for signing.

All of the fees customary to real estate loan transactions such as odd-days interest, escrow, title recording and notary fees, etc. Most of these are charged by or collected by the escrow company. Red Tower Capital – and other private lenders – charge loan origination fees, which are a flat percentage of the loan amount and processing, underwriting, and documentation fees. Our fees (and other loan terms) are very competitive with other private lenders.

Red Tower Capital does not report loan status to the credit bureaus. However, during the underwriting process, we will do a “hard pull” of your credit (like conventional lenders and other private lenders).

Here at Red Tower Capital, we may or may not ask for these, depending on loan size, LTV and other factors.

Many sellers will consider a private loan – and private loan approval from a reliable non-bank lender like Red Tower Capital – as the same as cash. This allows a borrower to purchase short sales and other distressed property that is sold as‐is more reliably.